1. (C) Summary. After years of preparation, Russian President Vladimir Putin, accompanied by 400 assistants, journalists and business executives in six planes, visited Libya on April 16-17 primarily to secure an agreement on Libya's sizeable Soviet-era debt. Libya and Russia agreed to swap the $4.5 billion debt for a large railroad contract and several future contracts in housing construction and electricity development. At Libyan insistence, the two sides signed an MOU committing them in principle to formalize a civilian nuclear agreement by the end of 2008. While Russian diplomats in Tripoli maintain that Putin did not have a political agenda for his visit, Libyan leader Muammar Qadhafi used the opportunity to claim he opposes NATO expansion to Ukraine and Georgia and to advocate for his one-state solution to the Israel/Palestine problem. Putin also raised -- without success -- the case of a detained Russian national and LUKoil employee who remains in pre-trial detention since his arrest under unclear circumstances in November 2007. End Summary.

2. (U) The Russian Ambassador to Libya briefed CDA on Putin's visit on April 23 and Poloff followed up in a separate meeting with Russian Poloff Evgeny Kozlov on April 24. MARATHON, 26-HOUR MEETING ON LIBYA'S $4.5 BILLION DEBT

3. (C) Finalizing an agreement on Russian forgiveness of Libya's sizeable Soviet-era debt topped Russia's agenda for President Putin's April 16-17 visit to Tripoli. After a marathon, 26-hour meeting between Russian Finance Minister Aleksei Kudrin and his Libyan counterpart, the two countries agreed that Russia would forgive Libya's $4.5 billion debt and, in exchange, Libya would sign commercial contracts on railways, housing construction, electricity development, and road construction. Libya opened the negotiations by stating that Libya did not recognize any debt to Russia and, instead, demanded that Russia offer financial compensation for Russia's role in passing and enforcing UN sanctions against Libya in the 1980s and 1990s.

4. (C) According to Kozlov, who was present throughout the negotiations, the two delegations "locked themselves in" the Libyan Ministry of Finance at 9 AM on April 16 and, with only a one-hour break from 18:30-19:30, did not emerge with an agreement until 11 AM on April 17 -- a half hour after Putin was scheduled to sign the debt agreement. Kozlov closely connected Putin's visit to the debt issue, noting that Putin made clear to Qadhafi that he did not engage in "political tourism" and would not leave without an agreement on the debt. Both Qadhafi and FM Abdulrahman Shalgham were in regular phone contact with the Libyan Finance Minister throughout the 26-hour negotiations. LIBYA INSISTS ON INKING CIVILIAN NUCLEAR MOU

5. (C) During the visit, the two sides also signed -- at Libyan insistence -- an MOU committing both sides to side a formal cooperation agreement on civilian uses of nuclear energy by the end of 2008. Kozlov noted that Libya hoped to sign a formal civilian nuclear agreement during the visit; however, no language had been agreed to before the visit and Russia refused to sign without further consultations. Kozlov reiterated that the civilian nuclear agreement will establish a general framework for future cooperation and will not/not include any specific projects. Current Libyan-Russian cooperation on the peaceful uses of nuclear energy -- limited to a few Russian technical experts working at the Tajoura nuclear facility -- is based on an "outdated" Soviet-era agreement with Libya; according to Kozlov, Russia hopes to "modernize" the framework for nuclear cooperation. He added that the Libyans are chiefly interested in acquiring nuclear-powered water desalination technology and that Libya is stringing along several possible sellers, including France, before it decides what to buy. Noting Libyan dissatisfaction with slow progress on Libyan efforts to purchase civilian nuclear technology from France following President Sarkozy's July 2007 visit to Libya, Kozlov cautioned that the Russian side made clear that any Russian sales will not/not be quicker than the French deal.

RAILROAD CONTRACT ONLY COMMERCIAL DEAL SIGNED DURING VISIT

6. (C) The Russian Ambassador downplayed the value of commercial contracts to CDA in an April 23 briefing for select foreign diplomats. Russia only signed one contract during the visit -- a 2.2 billion euro, four-year contact for the construction of approximately 500km of railroad between Sirte and Benghazi. Despite press reports to the contrary, Russian diplomats maintain that no military contracts were signed during the visit. Kozlov anticipated that, in the near-term, Libya and Russia would also sign commercial contracts on housing construction in Janzour and Zawiya, electricity line installation, road construction, and possibly an additional section of Libya's planned coastal railroad between Tunisia and Egypt. In addition, the two sides signed a general agreement on promotion of investments, an MOU on economic cooperation, an agreement on the protection of confidential commercial and military information, and three MOUs on oil/gas exploration between Gazprom and the Libyan authorities.

QADHAFI CLAIMS TO OPPOSE NATO EXPANSION

7. (C) In over six hours of private meetings on April 16-17, Qadhafi voiced his satisfaction that Russia's increased strength can serve as a necessary counterbalance to U.S. power, echoing the Libyan leader's frequent support for a more multi-polar international system. Qadhafi also raised the issue of NATO expantion to Ukraine and Georgia, assuring the Russian President that Libya opposes any further expansion of NATO. (Note: According to Kozlov, the Russian Embassy in Tripoli has learned that Qadhafi voiced strong support for Ukraine's NATO bid during Ukrainian President Aleksandr Yushchenko's April 2008 visit to Libya. End note.) The two leaders also discussed Qadhafi's vision for a one-state solution to the Israel/Palestine conflict. The Libyan leader expressed luke-warm support for Russian plans to convene a Middle East peace conference in Moscow, reflecting Libya's long reluctance to participate in any meeting that advocates a two-state solution to the Israel/Palestine conflict. The two leaders did not/not discuss non-proliferation or Iran's nuclear ambitions.

PUTIN RAISES CASE OF DETAINED LUKOIL REP

8. (C) Putin also raised with Qadhafi the case of detained LUKoil Overseas representative Aleksandr Tsyganov. According to Kozlov, Libyan security services arrested Tsyganov, a Russian national, in November 2007. Despite repeated requests for an official explanation of the charges against Tsyganov, the Russian Embassy has received only an "informal explanation" that Tsyganov is charged with disclosing the "secret" location of the U.S. Embassy in Tripoli. Noting that bribery allegations related to a contract tender have surfaced in the press, Kozlov said that the Libyan government had never mentioned bribery charges and instead told the Russians that Tsyganov's case had been referred to a state security court. (Note: Libyan security officials have indicated that he was arrested on suspicion of espionage. End note.) The Russian Ambassador and Consul have met "several times" with Tsyganov; however, Kozlov noted that arranging a meeting was exceedingly difficult and that the Ambassador had only been allowed to visit Tsyganov at the Bourj al-Fatah office building in Tripoli and not/not at Tsyganov's detention facility. Tsyganov remains in pre-trial detention at an unknown facility. According to Kozlov, as a result of Putin's failure to gain traction on the case during his visit, the Russians are prepared to "reciprocate" by arresting a Libyan businessman in Russia.

PROTOCOLARY SURPRISES

9. (C) Russian diplomats in Tripoli described Putin as "very patient" with Libya's unusual way of doing business. Upon Putin's arrival at Qadhafi's compound, Qadhafi drove up in a golf cart to meet Putin's motorcade and promptly abandoned Putin beside a large outdoor bonfire while the Libyan leader went to pray. On the morning of Putin's second day in Tripoli, Libya ordered Putin's motorcade redirected in the middle of the highway for a last-minute, private breakfast meeting with Qadhafi.

10. (C) The Russians were generally pleased with the performance of Libyan Protocol before and during the visit. After four meetings with Libyan Chief of Protocol (and Qadhafi confidant) Nuri al-Mismari in the run-up to the visit, Libya consented -- for the first time ever -- to grant Russian security and Putin's advance team access to Qadhafi's Bab Azziziya compound in Tripoli before Putin's arrival. Though al-Mismari initially balked at the Russian side's refusal to allow Putin to travel in a Libyan Protocol vehicle, he eventually relented and allowed the Russians to fly in three presidential limosines for use during the visit. When the Russians informed al-Mismari that Putin would be accompanied at all times by an assistant carrying Russia's nuclear launch codes, al-Mismari blew up: "Libya has made a decision to get rid of its nuclear weapons. We will not let you bring your nuclear weapons here!" Russian diplomats explained to al-Mismari that Putin would be traveling with codes and not/not the nuclear weapons themselves. STEVENS

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